Banking On A Woman

‍‍October 31, 2013 - כז חשון תשעד By Maayan Jaffe

After months of indecision and several scandals, Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid decided last week to appoint Dr. Karnit Flug as governor of the Bank of Israel. The Knesset approved the decision this week.

Netanyahu and Lapid said in a statement, “We have been impressed by Dr. Flug’s performance as acting governor in recent months, and we are certain that she will continue to assist us in moving the Israeli economy to additional achievements in the face of the global economic upheaval.”

Like America’s Janet Yellen, President Barack Obama’s nominee to be the first woman to chair the Federal Reserve, Flug is the first woman to serve as governor of the BOI. In Israel, the media is terming the selection “courageous.”

According to Simon Morris, an analyst with Citigroup Israel, Flug has similar economic views to American economist Stanley Fischer, who recently stepped down as governor of the BOI and who recommended Flug for the job. Morris said he expects Flug to be a “dovish” head, which means there is at least a 50 percent chance she will cut interest rates or keep them the same.

“It is clear she errs on the side of caution,” said Morris. “With currently mixed economic data, a strong [New Israeli Shekel] impacting exports, budgetary cutbacks and tax rises to deal with the budget deficit, she is taking over at a precarious time.”

But he said the finance community has confidence.

Until now, Flug has been the deputy governor of the Bank of Israel (since July 2011). She was appointed interim governor in July 2013 after Fischer concluded his second term. Flug has a master’s degree from the Hebrew University and a Ph.D. from Columbia University in economics. She has been a longtime member of the BOI research department, and in June 2001, she was appointed director of the research department and a member of the BOI’s senior managing staff. She has served on Israeli and international committees and is an expert on topics related to the labor market, the balance of payments and macroeconomic policies.

“[She is] in good stead,” Morris said.

While in the United States there is much focus on Yellen as the first female for her position, Morris said there is less focus on this in Israel. He told the JT there are numerous women in finance in Israel, such as the Rakefet Russak-Aminoach, president and CEO of Bank Leumi, one of Israel’s largest banks. Additionally, Smadar Barber-Tsadik has been the chief executive officer of First International Bank of Israel, Ltd., and last month Lilach Asher-Topilsky was announced as head of Discount Bank.

In politics, Shelly Yachimovich serves as head of the Labor Party and Tzipi Livni as justice minister.

“So while it is important to have another woman role model, and there can certainly be improvement in the women’s role across the country, they do often have prominent roles [in Israel],” said Morris. “Golda Meir was the world’s third female country leader as early as 1969. The army, as well, is internationally renowned for its female role across all areas, including combat.”